Pay day loans fulfill a "much underserved need" that banks are unwilling to finance, one expert has said.

Adam Gibbons, general manager for Check City Online, pointed out that savings banks do not usually underwrite short-term unsecured personal loans.

This is because they are not able to recover the processing costs that are associated with these types of cash advance loans.

"Pay day loans are designed to meet short-term obligations," he stated. "Cash advances are designed to help people meet unexpected bills and expenses."

Pay day loans are particularly useful at times of financial crisis and can be used in a number of ways, such as paying for healthcare or groceries.

Not only can the applicant usually get the money within few hours of approval, pay day loans also can be provided without any collateral.

In addition, bad creditors will be able to increase their credit score by quickly repaying the loan installments.

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